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Dan Ariely considers the mortgage business today on his Predictably Irrational blog:

Here is my perspective on the sub-prime mortgage crisis: When the housing market was hot, all the bankers that gave out loans assumed that their customers didn’t want their house to go into foreclosure, and that they would act accordingly. The first assumption was correct-no one wanted their house to go into foreclosure. But the second assumption, that consumers knew what to do in order to make sure they didn’t lose their house, was wrong, very wrong. The basic problem is that it is extremely difficult to calculate the optimal amount that any of us should borrow on a mortgage. Think about it: If you had to get a new house right now, what is the ideal amount to spend and how much of it should you take as a mortgage? Read more.